Does A Credit Card Denial Hurt Your Credit Score?

Does A Credit Card Denial Hurt Your Credit Score?

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Being denied for a credit card is never a good feeling. I remember back when I was a college student and was so excited to apply for credit cards, and then ended up being disappointed when I’d get rejected for cards. I took it personally, not to mention that it’s not fun to miss out on great credit card offers.

Fortunately nowadays I rarely get denied for credit cards, even though I have over two dozen credit cards. That’s thanks to the fact that I have a more established credit history, and also understand how actions impact my credit score, from opening card accounts to closing card accounts.

Readers often present me with situations and ask what I think their odds of approval for a particular card are. While I’m happy to give my best guess, perhaps the biggest question should be whether it actually matters. What’s the real impact on your credit score when you’re denied for a credit card?

How are credit scores calculated?

For some context, first let me post a quick refresher of how your credit score is calculated (if you already know this, by all means skip this section). Your credit score is made up of the following components:

  • 35% of your score is your payment history (whether you pay on-time)
  • 30% of your score is your credit utilization (how much credit you’re using compared to your total limits)
  • 15% of your score is your credit age (the average age of your credit accounts)
  • 10% of your score is the types of credit you use (how many different types of requests for credit you have)
  • 10% of your score is your requests for new credit (how many times you’ve made requests for credit, including credit cards)

Your takeaway here should be that if you make your payments on-time, don’t utilize too much of your credit, and keep your average account age fairly old, that’s 80% of your credit score right there. That’s what should matter most.

How is your credit impacted when applying for a credit card?

The only immediate impact on your credit score of applying for a credit card is that there’s a new inquiry on your credit report. 10% of your credit score is made up of your requests for new credit, so this is the aspect of your credit score that would be impacted by a credit card application.

Generally speaking, you can expect that on average your score will be dinged by two to three points for every inquiry. However:

  • Given that your credit score is on a scale of 300-850, two to three points really shouldn’t matter for most consumers
  • Everyone’s credit score will work differently, so some people may be impacted by an inquiry more than others, based on how many total factors there are at play
  • There are potentially really positive impacts to applying for credit cards, assuming you get approved — having a new card can increase your available credit, and can contribute to on-time card payments
  • An inquiry falls off your credit report after 24 months (and in reality any drop in score may be undone long before that)

What happens to your credit score if you’re denied for a card?

Applying for a credit card results in an inquiry on your credit score, but does the impact of that differ depending on whether you’re approved or denied? Well, the good news is that there’s no real “penalty” for being denied for a card.

It’s not like the card issuer puts a note on your credit report that you’re not credit-worthy, or anything. Rather the credit report just reflects the inquiry, but doesn’t show the account having been opened, and that’s not a big deal at all.

That would be no different than if you applied for a card, were approved, and then decided you didn’t want the card. So the good news is that you can be denied for quite a few cards over your lifetime, and it shouldn’t have a major negative impact on your credit score.

Should you just apply for cards and see what happens?

As I mentioned above, the context for all of this is that I’m often asked by readers what I think their approval odds are for a particular card. My advice is generally to not be overly-cautious when applying for cards, but also don’t apply recklessly.

The way I view it:

  • Check your credit score before applying for cards to get a sense of where you stand
  • If you are going to apply for a card and get denied, try to learn from that; in other words, if you’re denied for a Chase cards, don’t just apply for six other Chase cards right after, thinking you might get approved for one, but rather change something about your behavior as a consumer, and then try again
  • Personally my credit score is around 830, and I tend to think that anything above 740 is sort of “wasted,” in the sense that anyone with a score in that range should get approved for cards, get the best financing rates, etc.; based on that I’m also more likely to apply for cards

Bottom line

While getting rejected for anything in life isn’t fun, the good news is that getting denied for a credit card isn’t nearly as bad as you may assume. The only thing that really happens is that an inquiry shows on your credit report, and that could temporarily ding your score a few points. Unless you’re right at the cusp of having an excellent credit score, the impact of that should be negligible.

In general I encourage people with excellent credit to apply for cards even if they’re not sure they’ll get approved, though be realistic and smart about it. If you’re straight out of school, start with an Amex card rather than a Chase card. If your credit score isn’t amazing, maybe be a little more conservative than if you have an excellent credit score.

Hopefully this answers questions many may have about being denied for credit cards.

Conversations (12)
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  1. glenn t Diamond

    An interesting recap for credit cards.
    I'm not familiar with all aspects of being approved for a card in the US, but I know in Australia it is a very different experience.
    Here there is a minimum annual income/salary (starting around $30,000 p.a.) you need to show evidence of before you will even be considered for approval. Should you be retired, with an almost 7 figure bank account balance available for your day-to-day...

    An interesting recap for credit cards.
    I'm not familiar with all aspects of being approved for a card in the US, but I know in Australia it is a very different experience.
    Here there is a minimum annual income/salary (starting around $30,000 p.a.) you need to show evidence of before you will even be considered for approval. Should you be retired, with an almost 7 figure bank account balance available for your day-to-day use, you can expect to be auto-refused!
    You could arrange possibly to speak to a human at the point of application, but they are often not much more helpful than a machine. You get to the 'why bother' point.
    As for already holding a dozen or more other cards, you can forget about applying for more. Code Red bells would be deafening at that bank! Definately the biggest of minuses!

  2. Lon Guest

    Ben. When you check your credit score are you looking at the Vantage score or the FICO 8 score?

  3. Phil S Guest

    Hi Ben,
    It would be a great idea if you made it really clear that your strategy on credit cards is only applicable in the USA (and any other countries that you’ve researched).
    This would be disastrous advice for someone who lives in Australia.
    For example, in Australia, every time you apply for credit it is recorded on your credit file, regardless of approval or not, and remains there for 5 years....

    Hi Ben,
    It would be a great idea if you made it really clear that your strategy on credit cards is only applicable in the USA (and any other countries that you’ve researched).
    This would be disastrous advice for someone who lives in Australia.
    For example, in Australia, every time you apply for credit it is recorded on your credit file, regardless of approval or not, and remains there for 5 years. Multiple applications for the same type of credit (e.g. credit cards or personal loans) is an indication of someone in financial difficulty. No one has 20 credit cards- having 6 will decimate your credit score. Our credit score is calculated based on completely different criteria. Total credit limits are crucial but I never see you mention limits- so that must also be different in the US.
    We don’t all live in America, and it would be great if some content like this was tailored and relevant to other countries where your subscribers are.
    Happy to share more about how credit works in Australia if you’re interested.
    Please don’t see this as criticism, I’m a long time subscriber and enjoy your content.
    Thanks,

    1. Never In Doubt Guest

      I think you’re looking for a different site. Maybe One Mile at a Time Down Under.

      You can’t possibly expect Ben to become an expert on credit processes / credit cards in every country.

  4. jack Guest

    Same problem as Al above. Great credit score (at or above 800) never been rejected by Chase or BofA cards and I've now been denied 2x for Citi Premier this summer. Have called reconsideration line each time and they only give vague responses about credit usage v. available credit, cards not open long enough. I've got about 6-7 credit cards open, some from 2005, 2012, 2016, and then the rest since 2020.

    In their denial...

    Same problem as Al above. Great credit score (at or above 800) never been rejected by Chase or BofA cards and I've now been denied 2x for Citi Premier this summer. Have called reconsideration line each time and they only give vague responses about credit usage v. available credit, cards not open long enough. I've got about 6-7 credit cards open, some from 2005, 2012, 2016, and then the rest since 2020.

    In their denial letter, Citi provides a score between 1-9999 value using some sort of proprietary process and I'm over 8000 but still getting denied.

    Any CitiBank advice out there? Ben? Thanks in advance.

    1. glenn t Diamond

      Would some houskeeping on your cards help?
      Cancel those cards you underutilise or provide no benefits. The primary reason for opening an account is for the miles to do so, right?

  5. Al Guest

    @Ben - I have above 800 credit score and was just denied for Citi Premier. The reasons they stated are I have too much unused credit compared to available credit lines and too many accounts. What's your advice in contacting them for reconsideration? Thanks.

  6. Darin Member

    @Ben, I know you feel you don’t get special treatment, but I don’t think it’s appropriate to assume your experience getting approved for cards is applicable to anyone else. You’ve routinely talked about getting approved for cards that others with similar credit profiles have had tremendous difficulty getting. CapitalOne in general and some Citi cards typically restrict people with many open credit cards from being approved. You may not ask for or be told that...

    @Ben, I know you feel you don’t get special treatment, but I don’t think it’s appropriate to assume your experience getting approved for cards is applicable to anyone else. You’ve routinely talked about getting approved for cards that others with similar credit profiles have had tremendous difficulty getting. CapitalOne in general and some Citi cards typically restrict people with many open credit cards from being approved. You may not ask for or be told that you are getting preferential treatment, but the fact that your experience doesn’t match those of us with similar profiles otherwise doesn’t add up. I just find it hard to believe that your unblemished record of getting new cards has nothing to do with being a successful blogger who refers people to banks.

    1. BenjaminGuttery Diamond

      LOL. So you think all the banks and credit lenders have Lucky on some "auto approve" system? He does the same applications that we do, nothing special.

  7. BenjaminGuttery Diamond

    I tend to apply for 2 new cards, every 2 years or so. I only have 7-9 cards myself, so I haven't been doing this for too long. Unfortunately, it temporarily brings down my average age pretty significantly. With credit, I think TIME is the most important factor. If your age even dips below 4 years, kinda dings the score even more.

  8. Mike Guest

    Does a denial impact Chase's 5/24 rule?

    1. Ben Schlappig OMAAT

      @ Mike -- Nope, as that's calculated based on newly opened accounts.

Featured Comments Most helpful comments ( as chosen by the OMAAT community ).

The comments on this page have not been provided, reviewed, approved or otherwise endorsed by any advertiser, and it is not an advertiser's responsibility to ensure posts and/or questions are answered.

Never In Doubt Guest

I think you’re looking for a different site. Maybe One Mile at a Time Down Under. You can’t possibly expect Ben to become an expert on credit processes / credit cards in every country.

2
Phil S Guest

Hi Ben, It would be a great idea if you made it really clear that your strategy on credit cards is only applicable in the USA (and any other countries that you’ve researched). This would be disastrous advice for someone who lives in Australia. For example, in Australia, every time you apply for credit it is recorded on your credit file, regardless of approval or not, and remains there for 5 years. Multiple applications for the same type of credit (e.g. credit cards or personal loans) is an indication of someone in financial difficulty. No one has 20 credit cards- having 6 will decimate your credit score. Our credit score is calculated based on completely different criteria. Total credit limits are crucial but I never see you mention limits- so that must also be different in the US. We don’t all live in America, and it would be great if some content like this was tailored and relevant to other countries where your subscribers are. Happy to share more about how credit works in Australia if you’re interested. Please don’t see this as criticism, I’m a long time subscriber and enjoy your content. Thanks,

2
Ben Schlappig OMAAT

@ Mike -- Nope, as that's calculated based on newly opened accounts.

2
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